VENMO REPORTING

The IRS views the payment and/or receipt of money through Venmo or any similar peer-to-peer (P2P) app the same as a “traditional” payment and/or receipt of cash.

• So, the sending of money back and forth for personal purposes (e.g., paying for your share of dinner with friends) does not require any tax reporting.
• However, if you accept business payments on a P2P platform, you are responsible for reporting those earnings on your income tax return
  • You may or may not receive a 1099 from the payor, however, you are required to report the income even if you did not receive a 1099
• The P2P platform is required to issue a Form 1099-K to both you and to the IRS if in a given calendar year:
  • You receive gross payments for the sale of goods and services of $20,000 or more, AND
  • You receive over 200 separate payments
• If you use the P2P payment platform to make deductible payments (e.g., business payments), like any other business transaction, you must:
  • Have documentation to support the deduction
    • For example, receipts, invoices, etc.
  • Provide the payee with a Form 1099-NEC if you paid $600 or more to a qualified individual

The Treasury Inspector General for Tax Administration recently completed an audit of P2P payment applications due to the recent growth of payment applications. To learn more about their findings, please read this document available on Treasury.gov.